A Deal is a Deal. Right?

Our system of economic and social relations is built on a few simple and universally agreed upon principles. We believe in private property. You can’t just take what is mine. We believe in personal autonomy and responsibility. You can’t make me work or live somewhere if I do not myself agree to it, and I am responsible for the decisions I make and the commitments I enter into. Another one of our basic principles can be stated very simply: a deal is a deal. If two or more of us enter into an agreement and one of us does what has been agreed to, the others must live up to their end of the bargain, as well. If anything of the least value is involved in the exchange, what the lawyers call “consideration,” the agreement becomes a contract and can be enforced in the courts. In other words, a deal is a deal.

That, at least, is how I thought our society worked. It seems now that is no longer true. A deal isn’t the deal if one side doesn’t find it convenient to keep up their end, even if the other side past has fulfilled its part of the bargain for years and years and years.
Three examples leap to mind. The first is the case of retirees from Peabody Coal. I do not say from Patriot coal because many of these people didn’t work for the entity spun off from Peabody. Peabody created Patriot Coal, it seems, purely to move some of its retirement obligations off its own books so that it wouldn’t have to live up to its end of the deal, which was to provide the people who had fulfilled their end of the bargain through many years of labor with pensions and health care in retirement. Using the cloak of the bankruptcy and corporation law, they are walking out on their commitments. The directors and stockholders who elected them do not seem troubled that they are breaking the basic I-did-my-part—you-do-yours rule that underlies our society. And the Federal Bankruptcy Court seem willing to abet them in this swindle.

But the officials of Peabody/Patriot are not alone in thinking that a deal isn’t a deal if one side doesn’t feel like paying anymore. Recently
Time Magazine ran a story on “the end of alimony.” Whether people entering marriages today should be eligible for lifetime alimony if their relationships collapse is an issue on which I have no opinion. But future alimony is not what is in danger of being abolished. Many people – many women – entered marriages in the past on the understanding that they would be supported for life and that they would only lose that right if they themselves misbehaved or if they and their spouses together lost all their money. That was the deal. Now evidently many men (not to mention their second wives) find paying the money that they obligated themselves to provide when they first married inconvenient. Many legislatures and courts seem ready to take away alimony from women who got married thinking that, if worse came to worst, they would receive it. Even the financial part of the deal they made when they entered the marriage contract turns out not to be a deal after all.

I myself am discovering that a deal I entered into isn’t a deal. For many years I worked as a professor of English at one of Illinois’s state universities. The agreement was that if I taught, did research, and performed community service, I would be paid a salary, receive medical care and some other benefits, and that when I retired, I would receive a pension based on a set formula which would be increased by 3% each year, as well as medical care until I qualified for Medicare. All this would take the place of both a pension and Social Security, which the state had opted out of on my behalf. Each month the state deducted the agreed-upon amount from my paycheck. They were supposed to match that sum, but they never actually moved the cash into my account. Instead they made “notional” payments and assured me that the money would actually appear when the time came. Much to the state’s surprise, evidently, that time has come for too many of us, and the legislature and the taxpayers it represents no longer feel like holding up their end of the bargain. Even now, the legislature debates how far our pensions and the promised increases will be cut and how much we will be charged for our medical care. Strangely, no one in the Illinois Legislature rises to say, “Wait. A deal is a deal. The professors did their part. We are honor-bound to do ours, even if that means raising taxes or forgoing our own salaries.” A deal isn’t a deal or even a contract in Illinois.

Perhaps none of these situations seem terribly important if you are not a coal miner whose pension was transferred to a company you never worked for, a woman who raised a family counting on being supported for the rest for her life in return, or a college professor who counted on his promised pension and medical care once he left the classroom. But this trend should worry you even so. If those groups cannot call people, corporations, and governments to account when they break the deals they relied on, why should anyone else think they can count on receiving what they are promised once the work is done?

[November 2013 Update: Peabody decided to cough up more of the money it owned its retirees. The Illinois legislature is still debating plans to stiff the state’s retired professors. I can’t keep up with the divorce courts.]


Patriot Coal and Union Reach a Deal on Cutbacks.” New York Times, August 12, 2013.

“Ruling Favors Mining Firm in Labor Dispute.”
New York Times, May 29, 2013

Bill McClellan. “Patriot Coal case shows how federal judges live by their own rules.”
St. Louis Post-Dispatch, May 31, 2013

“Appeals court: Peabody liable for retiree benefits.”
St. Louis Post-Dispatch, August 21, 2013

“The End of Alimony?”
Time Magazine, May 16, 2013.